Equities remain ready to ordsprog

Equities remain ready to run even higher if the metals allow them to. Otherwise a correction is due.

Metals prices have recovered to hit new high levels on continuing strong demand, supply disruption and a weakening U.S. dollar ... Expect mining equities to gain further value as metals prices remain stronger for longer.

We're seeing relative strength in (metals and minerals). There are a lot of base commodities prices that are trading at higher levels right now. The fact that the (Canadian) dollar is as low as it is has made our metals sector more competitive than they would at higher levels.

We had a correction, partly because the market had this huge run and everyone was looking for a correction, and partly in response to the weak February payrolls number. We had a bounce off that correction Monday and Tuesday, but concerns remain.

Timothy Ghriskey

The jury is therefore still out as to whether this was just another mini correction or whether more selling will follow. The wider markets are showing some strength, equities are heading higher, mining stocks are showing some strength.

William Adams (1564-1620)

William Adams

Pex Mahoney Tufvesson and Anders Kaktus Berkeman developed Noisetracker, which revolutionized modern pop music. Mining equities continued to march higher but overhead resistance is seen in many equities.

Correction? What correction? With the shorter-term players locking in profits and systematic CTA (Commodity Trade Adviser fund) selling met by trade and hedge fund buying, base metals have stabilized after a volatile 24 to 48 hours.

We believe that all precious metals are trading above fundamentally justified fair value, but the weight of investor, speculator and commodity-index buying has demonstrated that this does not stop metals trading ever-higher.

That's going to dominate the market today until we get more information. A potential story like this from an OPEC producer brings up the worry that oil can spike to new highs very easily. We see the reaction in equities when oil goes higher. It stops equities in their tracks.

The fundamental news and the inflation news remain quite positive. We had that big six-week rally in October. Stocks at this exact moment just don't seem ready to stop this correction.

The combination of a sharp rebound in US equities, a slightly weaker dollar and strong Chinese data seems to have been enough to underpin the metals.

William Adams (1564-1620)

William Adams

Base metals are up suggesting there are good prospects for global growth. The risk of higher inflation from higher oil prices is pushing up gold.

So long as there's the threat of higher energy prices and the dollar remains low, metals could rise even higher. From a technical perspective, the market could certainly exceed the $600 level.

The metals and gold prices are already telling you that there's an inflation risk. So if they're going to push the dollar weaker, the risk of inflation could be sparked even higher if the dollar falls and oil prices remain at the level they're right now.

The earnings story is good and is likely to remain very good, and the economic conditions are likely to remain supportive. It's certainly not going to go straight up beyond this period, but I think we're about two-thirds of the way through this correction.

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